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How the City of London invented offshore banking

theguardian.com

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Re: How the City of London invented offshore banking

#31

Post by richardw »

5ersi wrote: post #3

My theory is that The City was the primary force behind Brexit. They are by far the largest and most influential entity and one of the only few that are going to be better off after Brexit. Even more, staying in the EU would actually jeopardize their special tax-heaven status as EU was moving toward more banking regulation. Note: EU rules or laws, once accepted by local parliaments, have the status of international l…

Look at the distribution of votes. Unless the City managed to influence outlying areas while having no effect on its own neighbouring areas, I'd say it's more likely that it was for remain. Banks can be blamed for a lot, but not Brexit.

http://www.ox.ac.uk/news-and-events/oxford-and-brexit/brexit...

Re: How the City of London invented offshore banking

#32

Post by seabee »

lhnz wrote: post #30
Lazare wrote: post #18

Earlier quoted context omitted.

> Working at one of these big banks, there are 10 000 employees for each building in canary wharf. It's delusional to think that they can be moved. They're already being moved. The question is how many and how fast, not whether it can happen at all.

It's strange because I've worked at one of the bank's mentioned for the last year and haven't heard of a single relocation. I think that it might be overblown or not affecting technology departments. I would have also thought that if 20% of the workforce were relocated it would be visible in the canteen, etc. Not saying that a relocation isn't happening at all, just saying that it's not visible within a bank.

It’s both. I know banking and insurance companies that offered relocations last year, but IMO that’s to save effort hiring for the EU offices rather than moving existing jobs. Moving an entire department isn’t practical.

Re: How the City of London invented offshore banking

#33

Post by yuhong »

Lazare wrote: post #16
UncleEntity wrote: post #12

Interesting that they try to pin the failure of the Bretton Woods system on some shadowy backroom figures instead of 1) the US inflating the dollar well past the amount of gold backing it, 2) governments cashing in their dollars for gold @ $35/oz and making a profit by selling it on the international market for its true market value and 3) the French calling for a return to a true gold standard...because who doesn't…

Yeah. Netting it down to the essence, the proposed explanation for the collapse of Bretton Woods seemed to be "USD inflation". Which is sure, plausible enough, I suppose. Unfortunately they then threw up their hands, ignored everything we know about inflation in general or that inflationary period in specific, and come up with some weird story about how 70s stagflation was actually caused by South American dictators…

The fun thing is that while I focus mostly on the US debt-based economy, the UK don't seem to be much better today.

Re: How the City of London invented offshore banking

#34

Post by hristov »

UncleEntity wrote: post #12

Interesting that they try to pin the failure of the Bretton Woods system on some shadowy backroom figures instead of 1) the US inflating the dollar well past the amount of gold backing it, 2) governments cashing in their dollars for gold @ $35/oz and making a profit by selling it on the international market for its true market value and 3) the French calling for a return to a true gold standard...because who doesn't…

You are right that the article did not mention a lot of important factors in bringing down Brenton Woods. The most important being the deficit spending of the US due to the vietnam war and the resulting inflationary pressure on the dollar. The second most important was England's delusional attempts to keep the pound expensive in relation to the other european currencies despite the fact that the french and german economies were clearly outperforming England. So you have a point there.

Regarding your last sentence, I think the point of the article is that capital controls perhaps acted to prevent a lot of the inequality that emerged after they were lifted.

There is no doubt that the years under bretton woods saw the fastest economic growth and improvement in living standards of average people in Western Europe and the US recorded in known history. Perhaps bretton woods was not the only thing to thank for that, but perhaps it had some influence.

It also cannot be denied that the lack of capital controls allows corrupt leaders to whisk large amounts of money away from countries in distress or in political turmoil.

Re: How the City of London invented offshore banking

#35

Post by hristov »

Lazare wrote: post #16
UncleEntity wrote: post #12

Interesting that they try to pin the failure of the Bretton Woods system on some shadowy backroom figures instead of 1) the US inflating the dollar well past the amount of gold backing it, 2) governments cashing in their dollars for gold @ $35/oz and making a profit by selling it on the international market for its true market value and 3) the French calling for a return to a true gold standard...because who doesn't…

Yeah. Netting it down to the essence, the proposed explanation for the collapse of Bretton Woods seemed to be "USD inflation". Which is sure, plausible enough, I suppose. Unfortunately they then threw up their hands, ignored everything we know about inflation in general or that inflationary period in specific, and come up with some weird story about how 70s stagflation was actually caused by South American dictators…

Obviously, if there is higher tax rate on higher incomes this will reduce inequality even if the net amount of taxes collected stays the same.

Re: How the City of London invented offshore banking

#36

Post by hristov »

5ersi wrote: post #3

My theory is that The City was the primary force behind Brexit. They are by far the largest and most influential entity and one of the only few that are going to be better off after Brexit. Even more, staying in the EU would actually jeopardize their special tax-heaven status as EU was moving toward more banking regulation. Note: EU rules or laws, once accepted by local parliaments, have the status of international l…

Interestingly, Bloomberg recently had a video segment on brexit and which financial institutions would win or lose. Unfortunately, since it was video I now cannot find the darned thing.

Anyways, it had several parts and in each part there was a representative of a group of institutions that talked about his/her opinion. The groups, as well as i can remember them, were "the city elders", the fintech startups, the money managers, the large international banks, and the insurance companies.

Pretty much all of them were strongly against brexit, except for the "city elders." The city elders were represented by an old man that was very pro brexit, explaining that he would welcome lighter regulation in order to offer more services.

So apparently there are people within the city that yearn for brexit because they want to break free of EU regulations and handle hot money like in the old days. I am not sure exactly who "the city elders" are, but apparently they exist and wish for brexit.

So it seems like there are different forces with different priorities within the city. And while most institutions that actually perform most of the economic activity from small startups to giant banks and insurance companies are against brexit, there lurk a bunch of scheming old men in a dark smoke filled room sipping port and licking their chops in happy anticipation of brexit (at least that is how i imagine them ).

But as to the question whether these "city elders" caused brexit itself, I am not sure. It seems that brexit was caused merely by a bunch of opportunist politicians trying to take advantage of the anti-immigrant backlash, and that they were searching for influence and votes rather than success at brexit.

Re: How the City of London invented offshore banking

#37

Post by user5994461 »

lhnz wrote: post #30
Lazare wrote: post #18

Earlier quoted context omitted.

> Working at one of these big banks, there are 10 000 employees for each building in canary wharf. It's delusional to think that they can be moved. They're already being moved. The question is how many and how fast, not whether it can happen at all.

It's strange because I've worked at one of the bank's mentioned for the last year and haven't heard of a single relocation. I think that it might be overblown or not affecting technology departments. I would have also thought that if 20% of the workforce were relocated it would be visible in the canteen, etc. Not saying that a relocation isn't happening at all, just saying that it's not visible within a bank.

It's completely overblown. Don't believe a thing you read in the news.

My last company opened a new office in non major US cities last year. The next day the newpapers published the article . There is no relation, we had to get back to them to redo the announcement.

About my current bank, there is a published article from a major media outlet specifically saying that my department stopped hiring and is being moved overseas because of Brexit. It couldn't be further from the truth, we've been hiring dozens of people over the last years. I don't know who to complain to to have this removed.

Re: How the City of London invented offshore banking

#38

Post by McP »

cm2187 wrote: post #28
5ersi wrote: post #3

My theory is that The City was the primary force behind Brexit. They are by far the largest and most influential entity and one of the only few that are going to be better off after Brexit. Even more, staying in the EU would actually jeopardize their special tax-heaven status as EU was moving toward more banking regulation. Note: EU rules or laws, once accepted by local parliaments, have the status of international l…

Do you have anything to substantiate that? All banks were publicly against Brexit and, working myself in the City (and working on dealing with Brexit), I hardly know any banker who was pro Brexit. Banks are large organisations that can deal with the complexity of Brexit by setting up subsidaries and moving people, but this is perceived as a hassle and a distraction, not an opportunity. As for EU banking regulations,…

Please delete your third paragraph. At best it's a gross oversimplification. At worst, plain old racism. I found the rest of your comment insightful.

Re: How the City of London invented offshore banking

#39

Post by zazen »

n4r9 wrote: post #22
ForFreedom wrote: post #20

Earlier quoted context omitted.

who/what is the "The City"?

It variously means London, The City of London (which is a district inside London with an unusual political status), or the host of financial and trading services industries which in the UK are largely based in the City of London.

It doesn't mean greater London. It means the second and third things on your list.

Re: How the City of London invented offshore banking

#40

Post by NeedMoreTea »

simonh wrote: post #24
NeedMoreTea wrote: post #4

Earlier quoted context omitted.

The article covers all that. Warburg missed the freedom, and excitement, of the German markets in the 20s and 30s. So created an instrument, Eurobonds, in the 1960s to escape the carefully constructed international limitations of Bretton Woods. Add further desire to be outside the system from the US not being a neutral arbiter of the postwar international currency. That led to the inspiration for Eurobonds: the Eurod…

>That Warburg managed to get away with something so artificially constructed to evade laws is, to say the least, disappointing. Why should a person in London be bound by laws in the US? Warburg did nothing illegal. I’m all for the rule of law in general, but it’s unreasonable to try to use laws to distort fundamental economic reality, while also actually acting in such a way to undermine the economic system those law…

The UK was an enthusiastic participant to Bretton Woods and the Bank of England was not yet an independent body.

I would have assumed that UK laws and regulations were updated similarly to facilitate Bretton Woods, not just the US. In fact I was under the impression they had been resulting in the dullness of City banking, and the unprecedented period of stable growth etc, postwar through to the 60s.

Even had they not BoE should have been able, or been required, to step in and regulate it out of existence - or at least out of the UK.

> trying to cheat the markets for political purposes

Fundamentally disagree here. Markets need strong regulation for purposes that need not be political at all.

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